This website uses cookies to improve your user experience. By continuing to use this site you consent to the use of cookies on your device, as described in our cookie policy. Parts of this website may not work as expected without cookies. To find out more about cookies, including how to manage and delete them, visit www.aboutcookies.org or www.allaboutcookies.org.

Learn more about the companies mentioned in this article in the Sourcebook:

Qumu’s wins covered manufacturing, retail, banking, hospitality, pharmaceuticals, health care, and communications, and demonstrated a range of use cases, serviced by on-prem, cloud-based, and hybrid solutions, demonstrating that the “all things to all people” approach seems to be gaining traction, at least in the corporate space.

Vern Hanzlik, the Qumu CEO, said recently: “This last quarter [Q3 2017] was very good on its own, but in the larger picture represents multiple quarters of execution of Qumu’s sales and product development strategy. We expect our strategy to gain momentum in future quarters, and continue to deliver the kinds of customer wins we experienced in the third quarter.”

Having had a relatively successful year, Qumu certainly shows that this more generalist approach can work. But the real question is whether it can continue to drive growth in 2018. In terms of valuation, it still has a market cap of a little under one-tenth of its rival Brightcove.

Kaltura has also grown a broad customer base around three strands—corporate customers, educational institutions, and content providers, mainly in the TV space.

Kaltura’s turnover is now estimated at around $100 million per annum, but the profitability of the company is open to debate. We won’t get any clear guidance soon, as an IPO looks unlikely to happen in the short term.

The main problem Kaltura faces is that, unlike Panopto with the Zoom integration or Qumu with its acquisition of Kulu Valley, a key element missing from the platform is the capture of videoconferencing and other live sources. Kaltura has already stated that this is a goal for this year, but the company will have to act rapidly to not be left behind.

Brightcove, the biggest of the leading OVPs, had a much more difficult year than many of its competitors. Brightcove expected to become profitable in 2017, but given the results up to the end of Q3, that now looks unlikely. Over each of the last 2 years, Brightcove has looked to break even or become profitable the following year. But the company only saw a 2.9 percent increase in revenue in Q3 and, despite generating revenue of $39.5 million versus analyst expectations of $37.99 million, still didn’t make a profit.

The stock itself had a roller coaster year as it rose after the summer before dropping back significantly in December 2017. The general instability around Brightcove has not only come from the stock market speculation about profitability and growth potential, but also from other internal sources.

In March, Chet Kapoor of Tenzing Global Management resigned from the board, issuing a public resignation letter that was highly critical of the “complacent, status quo-supporting boardroom environment” and calling for the CEO David Mendels to be held accountable for negative shareholder returns. Kapoor also suggested that Brightcove form an M&A committee to explore the possibility of selling the company.

Mendels agreed to step down in the summer on the back of a year of poor stock performance. He was replaced by Andrew Feinberg, the president and COO, on a temporary basis while a replacement was sought, but it is looking increasingly as if this appointment could be more long term.

To add to the air of uncertainty, competitor Ooyala sued Brightcove in May alleging that two former employees stole detailed customer information in an effort to undercut Ooyala’s business in Latin America. The case is ongoing.

In his resignation letter, Kapoor stated, “From the Company’s historical proxy statements, 14 of the company’s reported Software-as-a-Service industry peers have been acquired by strategic or financial buyers.” This cuts to the core of the state of the sector at the moment, and as Brightcove struggles for profitability it would suggest that we are in a significant period of consolidation, as profitability can only really be achieved through economies of scale. The question becomes, “What does the future hold for the OVP market in general?”

An Uncertain Future

With several of the major players focusing on similar markets then, it may be difficult to deliver real economies of scale by consolidation. For some of these vendors, acquisition by large corporates that want a hand in their market may be more likely, as with IBM’s acquisition of Ustream.

However, Brightcove, Kaltura, and particularly Qumu may gain a significant advantage by having a more diverse client base and will be able to acquire and integrate smaller specialist providers to really drive forward profitability. Despite the differences in scale, the future of all three businesses will be defined by whether they can deliver a reasonable profit without being part of a bigger entity.

With larger players such as Microsoft offering corporates a relatively cheap service such as Stream, which integrates with existing products, the larger platforms may find that both their margins and markets are under pressure from cheaper, better-integrated offerings, and defending their positions may be more difficult if they remain independent.

Whether we will see any big acquisitions or mergers in the year ahead is up for debate, but we may well see a series of smaller ones. And the current, large-platform providers can be sure they will face challenges from both the smaller, more-focused platforms and the larger, value-added offerings from other suppliers.

So growth in the amount of video content generated in the corporate world looks set to continue in 2018, but it will be the platforms that learn to adapt to changing corporate needs that will prosper in such an environment.

[This article appears in the Spring 2018 issue of Streaming Media European Edition.]